1991 (7) TMI 147 - AT - Income Tax

Summary

Issues Involved:
1. Penalties levied under Section 271(1)(a) of the IT Act for late submission of returns.
2. Penalties levied under Section 271(1)(b) of the IT Act for non-compliance with statutory notices.

Detailed Analysis:

Issue 1: Penalties under Section 271(1)(a) for Late Submission of Returns

Facts and Background:
The assessee, a firm with three partners, filed returns late for the assessment years 1979-80, 1980-81, 1981-82, and 1982-83. The delays ranged from 28 to 31 months, and penalties were levied accordingly. The firm cited labour troubles and disputes among partners as reasons for the delay.

Arguments by the Assessee:
- Labour trouble in the factory of M/s Anand Synthetics Pvt. Ltd. delayed the availability of necessary information.
- Strained relationships among partners hindered the timely filing of returns.
- The explanation provided was rejected without reasons, and penalties should not be automatic but a matter of judicial discretion.

Arguments by the Department:
- The assessee maintained regular books of account and had all necessary purchase vouchers.
- Reconciliation with M/s Anand Synthetics Pvt. Ltd. was not a reasonable cause for delay.
- The assessee's argument that delays in one year justified delays in subsequent years was not acceptable.

Tribunal's Findings:
- The assessee was aware of its obligation to file returns, as evidenced by the filing of extension applications.
- The reasons provided by the assessee were not reasonable or sufficient to justify the delays.
- The burden of proof for reasonable cause lies with the assessee, which was not discharged in this case.

Legal Precedents Cited:
- Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC)
- CIT vs. Gujarat Travancore Agency (1989) 177 ITR 455 (SC)

Conclusion:
The penalties under Section 271(1)(a) were upheld as the assessee failed to provide a reasonable cause for the delays. The appeals for penalties under this section were dismissed.

Issue 2: Penalties under Section 271(1)(b) for Non-Compliance with Statutory Notices

Facts and Background:
The assessee failed to comply with various notices issued under Sections 142(1) and 143(2) of the IT Act. The penalties were imposed for non-compliance.

Arguments by the Assessee:
- The partner responsible for tax matters was busy resolving disputes in the factory.
- Disputes among partners contributed to the non-compliance.
- The factual explanations provided were not adequately considered by the authorities.

Arguments by the Department:
- The partner's involvement in factory disputes did not justify non-compliance with statutory notices.
- Notices required the production of books of accounts, which could have been done by any responsible person in the firm.
- No reasonable cause was shown for non-compliance.

Tribunal's Findings:
- The assessee did not demonstrate why the statutory notices could not be complied with.
- The existence of disputes among partners was not established.
- The reasonable cause for non-compliance was not proven by the assessee.

Conclusion:
The penalties under Section 271(1)(b) were upheld as the assessee failed to show a reasonable cause for non-compliance with statutory notices. The appeals for penalties under this section were dismissed.

Final Decision:
All appeals related to penalties under Sections 271(1)(a) and 271(1)(b) were dismissed, and the penalties were upheld.